• Buying in: Alpe d’Huez
• Property price: €1,916,000
• Loan Amount: €1,340,000
• Mortgage Type: Repayment *
• Mortgage Term: 12 
• Interest Rate: 2.2% fixed *
• Loan-to-value: 70%

The context

Our clients are Swiss residents with an excellent profile and high incomes. The clients were thinking of using the equity from the sale of their property in Sweden to purchase the property in France. Hence our clients signed the compromis de vente without a mortgage clause. However, after the Covid-19, the market in Sweden was not as strong as it was previously and our clients realised they actually needed a mortgage. 

Our approach

We first managed to get an agreement for a loan with 70% LTV with a fixed rate of 2.5% over 15 years on a repayment basis. 

However when the Risk Committee studied the application, they checked the company that our client was the CEO of and they realised that the market share value of the company had gone down the past few months. Because of this, they tried to reduce the mortgage amount and reduced the duration of the mortgage in order to limit their risk and make sure that the debt would be repaid faster. 

Our contact at the bank did an excellent job to maintain the level of borrowing but had to compromise and reduce the duration to 12 years. What’s interesting here is that it shows how deep the Risk Committees are willing to go to make sure they are lending to the right person. This is what makes the French mortgage market quite safe (though no investment is 100% safe, remember) and that is how French banks can offer such good terms. Just be prepared to have a couple of sweats…

With the mortgage, they will benefit from tax optimization (and particularly avoid paying the French Property Wealth Tax called Impôt sur la Fortune Immobilière – ‘’IFI’’) but also get the maximum out of the SARL – a company vehicle to purchase the property in France – that the clients wanted to set up. As we mentioned previously, it is really interesting to apply for a mortgage rather than purchasing the property in cash as we can get excellent terms. 

* The rate / the product may differ to what is currently offered since this mortgage has been agreed.